Rogoff Says Ireland Among European Nations at Risk of Default
Ireland is among the European countries apart from Greece that are at risk of defaulting on their debt, Harvard University economist Kenneth Rogoff said.
While Ireland, which got a 67.5 billion-euro ($86 billion) bailout from the International Monetary Fund and the European Union in 2010, has “done a lot of great things” to restructure its economy, it isn’t immune to the “trauma” that is still occurring in Europe, Rogoff, whose work has examined the history of sovereign defaults, told reporters in Bangkok today.
“There’s talk in Europe about ‘Maybe Greece, but everybody else is just perfect, we don’t have a problem besides Greece’,” Rogoff said, referring to the possibility of defaults. “All of my work suggests that would be a very, very, very fortunate outcome.”
Greece is in final negotiations to persuade investors to forgive at least half of its debt, the euro area’s first large- scale restructuring. Prime Minister Lucas Papademos expects to have an outline for the 100 billion-euro plan next week, when talks on the terms for a second financing deal with EU and IMF officials start in Athens.
“Most countries default long before they really couldn’t pay,” Rogoff said. “They choose to default. That’s clearly the case with Greece today.”
Rogoff is the co-author, with Carmen M. Reinhart, of “This Time Is Different: Eight Centuries of Financial Folly,” a history of financial crises that focuses on government defaults.
To contact the reporters on this story: Daniel Ten Kate at dtenkate@bloomberg.net; Shamim Adam in Singapore at sadam2@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
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